Calavo Growers soars after avocado margins impress in FQ2

calavu farmers (Nasdaq: CVGW) in early trading Tuesday after it beat estimates for fiscal second-quarter earnings due to improved prices and margins in its core avocado business. It was also noted that the tomato portfolio has improved sequentially and compared to last year. the The company also highlighted that it has meaningfully improved its guacamole business through favorable input costs and operational efficiency.

Revenue rose 16.5% year over year to $184.4 million. Sales of the growing segment increased by 18.9% and sales of the fitted segment decreased by 1.9%. It is worth noting that the average selling price of avocados in the agricultural products sector increased by 28% compared to last year. Adjusted net income was $8.9 million, or $0.50 per diluted share, versus adjusted net income of $5.1 million last year, or $0.29 per diluted share. The company had adjusted EBITDA of $13.4 million, compared to $9.9 million for the same period last year.

On the balance sheet, Calavo Growers (CVGW) ended the quarter with $48.5 million of net debt, which included $45.8 million of borrowings under the credit facility and $7.0 million of other long-term liabilities and finance leases, less cash and cash equivalents of $4.3 . million. The company had approximately $47.3 million of cash at the end of the quarter.

Looking ahead, CEO Lee Cole said the third quarter is off to a great start, and the company expects strong results as it continues to focus on maximizing value in the core business. “We are working hard to complete the sale of the Fresh Cut business. Some terms, including price and structure, are still under negotiation, and we are targeting to complete the sale during the third fiscal quarter,” he noted.

Shares of Calavo Growers (CVGW) rose. 16.63% in early trading Tuesday to $29.15 versus a 52-week trading range of $21.42 to $38.97. The short interest on CVGW is 6.1% of the total float. The dividend yield for new buyers is 1.6%.